London pre-open: Fed minutes to dampen sentiment

21st Nov 2013 07:29

City sources predict the FTSE 100 will open around 21 points lower than yesterday's close of 6,681.08, after minutes from the latest Federal Reserve meeting seemed to suggest that the central bank might be moving closer to tapering. More specifically, the fact that for the first time the Fed included a section on 'Policy Planning' - in which they discussed various possible contingency plans - led to a fair bit of market commentary regarding the now supposedly greater possibility of an earlier start to Fed tapering. Also overnight, speaking at an event at the London School of Economics MPC member Martin Weale said that there had been a noticeable but not significant increase in inflation expectations since the start of forward guidance.The preliminary HSBC Chinese manufacturing sector Purchasing Managers' Index (PMI) slipped to a reading of 50.4 for the month of November, from the previous month's print of 50.9 (consensus: 50.7).After a busy earnings session this morning, markets will turn to the release of economic data including Eurozone manufacturing and consumer confidence, UK public finances and US initial jobless claims. The Eurozone purchasing manager's index (PMI) for manufacturing is expected to rise to 51.5 in November from 51.3 a month earlier. The PMI composite, which includes both manufacturing and services, will rise to 52 this month from 51.9 in October, according to consensus. A reading above 50 signals expansion.Eurozone consumer confidence for November will rise to -14 from -14.5, separate data is anticipated to show.City economists predict UK public finances to have improved markedly in October with the cash requirement, the key measure for debt issuance, falling more rapidly than the headline borrowing numbers. Public sector finances came in at £0.6bn in September. Later in the US, initial jobless claims are forecast to fall to 335,000 for the week to November 15th from the prior week's 339,000 claims. The jobs data will be used by investors to weigh whether the labour market has improved enough for a possible tapering of the Federal Reserve's stimulus programme next month. In UK company news, SABMiller's revenues in the first half were hurt by the depreciation of key currencies against the US dollar. The drinks giant's revenue in the six months through September were flat against the prior year at $17.5bn. Rolls-Royce has unveiled yet another contract win, in this case with Petrobras. The $138M, five-year services contract will see it support Petrorbras's oil production activities offshore Brazil by supplying advanced maintenance and repair services to support fifteen Rolls-Royce RB211-G62 industrial gas turbine power generation units.Speciality chemicals firm Johnson Matthey reported a robust set of half-year results, powered by a strong performance in Emission Control Technologies, ahead of new European legislation, and good demand for Process Technologies' products. Underlying pre-tax profit rose 13% to £212.9m for the six months ended September 30th on revenue that surged 31% to £6.4bn.Housebuilder and construction company Galliford Try has won a £38m deal to build an office development in western England. The group's building business has won the contract to build the eight-storey Forbury Place project in Reading from client M&G Real Estate and Bell Hammer. Antofagasta stock was downgraded to neutral from buy at UBS. Resolution has been taken off of Bank of America's Europe 1 list. NR